Cost Containment at ASCs: 4 Best Ideas

As healthcare evolves there are several new opportunities for physician investors to keep surgery centers a profitable business.

At the 12th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference in Chicago on June 12, a panel of experts discussed the keys to keeping surgery centers profitable. The panel included Vice President National Accounts, Ambulatory Surgery Division of Medline Industries Jerry D. Johnson; President and CEO of Surgical Management Professionals Michael J. Lipomi; Vice President Acquisitions and Development of Ambulatory Surgical Centers of America Jeff Peo; and Owner of Medical Consulting of America Joseph Delligatti. The panel was moderated by Partner at McGuireWoods Barton C. Walker.

ASCs are now thinking about marketing to their customers, but their customers for marketing aren’t always the patient; they are the physician and physician schedulers or insurance companies who direct referrals.

“You have to focus on the right customer in the right place,” said Mr. Lipomi. “Marketing should be focused on the physician offices, schedulers and the physicians themselves because that’s who is directing cases to your facility. You want an ASC that is convenient, easy to access for scheduling and a good place to work.”

Mr. Delligatti often goes to physician offices to remind staff members about the ASC and how physicians can take advantage of their block time. For new physicians, they break down scheduling options and host networking events for all affiliated physicians--owners and non-owners alike--to learn more about each other.

Another opportunity to improve profitability could be from the vendors. “If you aren’t utilizing the services from your center, you are missing big opportunities,” said Mr. Johnson. “We are called on by our best customers to help them spread the world about what they are doing at the center. You want vendor partners you can trust and depend on to get out there and help build your business.”

Growth is especially important today, as more physicians are becoming employed by the hospital. In some markets, recruitment opportunities are drying up, but that doesn’t mean the ASC should become complacent.

“I don’t think you should ever stop recruiting,” said Mr. Peo. “The lifeblood of your center is to recruit good surgeons to use it. You have to have that with declining reimbursements and case volumes. Patient deductibles are going up and they are waiting longer to have surgery; you need to recruit more physicians to add case volume to your center.”

The panelists also shared their best ideas on cost containment to prepare for the future, which include:

1. Get the best price for materials through long-term contracts with suppliers2. Communicate with physicians about materials and implant cost3. Benchmark materials pricing to ensure you have good contracts4. Track all costs vigilantly and ask about potential waste or unnecessary spending increases

Another crucial area to the ASC’s profitability is the revenue cycle process. Payer contracting is challenging, but many centers find renegotiating the contracts each year beneficial. “My best advice on payer contracting is don’t sign the first thing they send you,” said Mr. Peo. “Be vigilant, be diligent and you will see a significant impact on rates.”

Mr. Lipomi advises checking the chargemaster data and performing coding and billing audits to make sure the ASC codes for and receives the maximum allowable amount, and the insurance company pays the bills in full according to contracted rates.